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Good Decision for a Second Opinion

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You've done your homework, contacted a mortgage company and believe you are pre-approved.That part of the process is finished and you can concentrate of finding a home and moving...or can you?Pre-qualified and pre-approved are two different things but some people, including some in the business, use the terms interchangeably.Pre-qualified is an opinion of likelihood that a borrower will be approved based on preliminary information about their income and credit.Whereas, in a pre-approval, the borrower's credit report is updated and pulled, income and assets verified and involves pre-underwriting.Even when you have a highly qualified loan officer, the real decision maker is the underwriter who can commit the lender.Generally speaking, a person who has been pre-approved receives a written letter stating the terms and conditions of the commitment.A second opinion from a different lender can be a comforting thing for a borrower.It will either confirm that the first lender was corre…

Prepaying Your Mortgage

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Paying off your mortgage can provide peace of mind and is a worthy goal but is it the best thing for you to do at this time.Do you have higher interest rate debt currently?If you have credit card debt with double-digit rates or personal, car or student loans, you'll probably save more money from interest by paying these things off before you pay off your mortgage which is usually one of the lower rates on debt.Many financial advisors recommend funding your annual retirement contribution before paying down a mortgage.If your company offers matching funds for your contribution, you would be leaving money on the table by not making the contribution to your retirement.For instance, you would be getting a $10,000 value by putting $5,000 into your retirement if your company matches it.Creating an emergency fund is another favorite of financial advisors.When the rainy day arrives and you need funds, it may be difficult to get money from the equity of your home, especially if you have los…

Lower Your Cost of Housing

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Homeowners still have considerable advantages from the amortization of the mortgage and the appreciation enjoyed by most homes even with taking the standard deduction instead of itemizing to take the interest and property tax deduction.There is an adage, "Rent or buy, you pay for the house you occupy."You either pay for it yourself or for your landlord.The people who have job security, sufficient income, good credit and the funds for the down payment and closing costs can enjoy the many financial and emotional benefits of homeownership.Looking at a $350,000 home purchased with an FHA mortgage with 3.5% down payment at 3.25% interest for 30-years, the total payment would be $2,420 a month.During the first year, the average monthly principal reduction is $573 a month which build the owner's equity in the home.At an estimated 3% appreciation, this home would increase in value at the rate of $875 a month during the first year which again builds the owner's equity in the …

Annual Advisory

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Homeownership is a privilege and a responsibility. Even after decades of owning a home, you may still need some help to handle some of its challenges by focusing on the three "M"s of homeownership: maintenance, minimizing expenses and managing debt and risk.While many people recognize the benefits of annual wellness, financial, vehicle and equipment maintenance visits, an important checkup that you may not have considered is an annual homeowner advisory or real estate review. Why would you treat the investment in your home with less care than you treat your car or your HVAC system?Consider exploring the following:Do you know the current value of your home? (You can, by obtaining a list of comparable sales in your immediate area, as well as what is currently on the market for sale.)Have you compared your assessed value for tax purposes to the fair market value in order to possibly reduce your property taxes? Even if you've refinanced in the last two years, can you save mo…

Why homebuying begins with the agent

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It takes a team of professionals to buy a home like the lender, the appraiser, the inspector, the property insurance agent, the title officer, and others but the real estate professional may play the most critical role.Baking bread seems so simple.There are only four ingredients: flour, salt, yeast, and water; yet, there are steps that should be followed as well as a certain sequence to get the proper results.Some people mix all of the dry ingredients before adding the hot water to activate the yeast.Other people will activate the yeast in the warm water first to allow it to "bloom."Both methods can achieve satisfactory results but one knowledgeable person needs to be in charge of the bread instead of having multiple people to be concerned with just their one ingredient or contribution like mixing, kneading, fermentation, benching, shaping, proofing or baking.Similarly, in a home purchase, the buyer's agent can be the one who puts things in the proper order and sees that…

Why Keep Track of Home Improvements

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Homeowners receive a generous exclusion on the gain of their principal residence up to $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly.Most people probably consider the gain or profit in a home to be the difference between the purchase price and the sales price.IRS allows a taxpayer to lower the sales price by the selling expenses before calculating gain.Normal expenses like real estate commission, title policy, attorney fees, and other sales expenses may be included if they are normal and customary.Another significant adjustment is that capital improvements made during the holding period can be added to the cost basis.Normal maintenance like repairs are not considered improvements.IRS says that if the expenditure materially adds value (features) to the property, or appreciably prolongs the useful life of the property, or adapts a portion of the property to a new use, it can be considered a capital improvement.Examples could include replacing a heating …

Rethinking Home

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The last two months of the new normal stay at home has led many homeowners to rethink the way they live in their home.It has now become an office for working at home; a school for children; a gym to stay in shape; and a place for recreation.The repurposing has people evaluating whether their home still meets their needs or if some changes are necessary.In some cases, adult children have moved back home, and, in others, there are parents who have moved in for the first time.Staying at home and sheltering in place is necessary but how much togetherness can one family take and how long is it going to last?Temporary is stretching into longer than expected and even when vaccines and treatments are discovered, will things really go back to the way they were? A home is a place to call your own; to raise your family, share with your friends and to feel safe and secure.Covid-19 has changed the scope of feeling safe and secure at home and may now be considered a sanctuary of safety more than ev…